Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear feet of bamboo, which costs $2.00 per foot. Each

Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear feet of bamboo, which costs $2.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $12.00 per hour. Iguana has the following inventory policies:

  • Ending finished goods inventory should be 40 percent of next months sales.
  • Ending direct materials inventory should be 30 percent of next months production.

Expected unit sales (frames) for the upcoming months follow:

Expected unit sales (frames) for the upcoming months follow:

March 275
April 250
May 300
June 400
July 375
August 425

Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $7,200 ($600 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $650 per month plus $0.60 per unit sold.

Iguana, Inc., had $10,800 cash on hand on April 1. Of its sales, 80 percent is in cash. Of the credit sales, 50 percent is collected during the month of the sale, and 50 percent is collected during the month following the sale. Of direct materials purchases, 80 percent is paid for during the month purchased and 20 percent is paid in the following month. Direct materials purchases for March 1 totaled $2,000. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $150 in depreciation. During April, Iguana plans to pay $3,000 for a piece of equipment.

IGUANA, INC.
Budgeted Income Statement
For the Quarter Ending June
April May June 2nd Quarter Total
Budgeted Sales Revenue $6,250 $7,500 $10,000
Budgeted Gross Margin $6,250 $7,500 $10,000 $0
Budgeted Net Operating Income $6,250 $7,500 $10,000 $0

List of all

  • Budgeted Contribution Margin
  • Budgeted Cost of Goods Sold
  • Budgeted Interest Expense
  • Budgeted Sales Returns and Allowances
  • Budgeted Sales Revenue
  • Budgeted Selling and Administrative Expenses

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Principles Techniques And Practices

Authors: Mustaq Ahmad, Mohd Ashraf Ali

1st Edition

8184841949, 978-8184841947

More Books

Students also viewed these Accounting questions

Question

Choosing Your Topic Researching the Topic

Answered: 1 week ago

Question

The Power of Public Speaking Clarifying the

Answered: 1 week ago